UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, D. C.  20549
                           FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 1996

                               OR

[   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the transition period from ____________ to ____________

     Commission file number 1-4169

               TEXAS GAS TRANSMISSION CORPORATION
     (Exact name of registrant as specified in its charter)

           Delaware                        61-0405152
     (State or other jurisdiction of     (I.R.S. Employer
     incorporation or organization)     Identification No.)


    3800 Frederica Street, Owensboro, Kentucky         42301
     (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code: (502) 926-8686


Indicate  by check mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes  X    No_

Indicate the number of shares outstanding of each of the issuer's
classes  of  common  stock,  as of the latest  practicable  date.
1,000 shares as of November 8, 1996

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
H(1)(a)  and (b) OF FORM 10-Q AND IS THEREFORE FILING  THIS  FORM
WITH THE REDUCED DISCLOSURE FORMAT.
<PAGE>
               TEXAS GAS TRANSMISSION CORPORATION

                              INDEX



                                                                    Page
                                                                   Number

Part I.  Financial Information

Item 1.  Financial Statements.....................................    3

Post-acquisition and Pre-acquisition Operations:
  Balance Sheets at
     September 30, 1996 and December 31, 1995.....................  3-4

  Statements of Income
     For the Three Months Ended September 30, 1996 and 1995,
     For the Nine Months Ended September 30, 1996,
     For the Period January 18, 1995 to September 30, 1995, and
     For the Period January 1, 1995 to January 17, 1995...........  5-6

  Statements of Cash Flows
     For the Nine Months Ended September 30, 1996,
     For the Period January 18, 1995 to September 30, 1995, and
     For the Period January 1, 1995 to January 17, 1995...........    7

  Condensed Notes to Financial Statements......................... 8-12

Item 2.  Management's Narrative Analysis of
         the Results of Operations................................13-15

Part II.  Other Information

Item 6.Exhibits and Reports on Form 8-K ..........................   16

Signatures........................................................   17
<PAGE>
Item 1.   Financial Statements

               TEXAS GAS TRANSMISSION CORPORATION
                                
                         BALANCE SHEETS
                     (Thousands of Dollars)
                           (Unaudited)
<TABLE>
<CAPTION>
                                            September 30,    December 31,
                    ASSETS                      1996            1995
<S>                                        <C>              <C>
Current Assets:
 Cash and temporary cash investments        $      461       $      206
 Receivables:
   Trade                                         1,346            6,798
   Affiliates                                      491            1,546
   Other                                         1,377            1,150
 Advances to affiliates                         62,937          113,289
 Transportation and exchange gas receivable      1,263            3,113
 Costs recoverable from customers:
   Gas purchase                                   -               1,729
   Gas supply realignment                        7,747           15,730
   Other                                        15,146           10,912
 Inventories                                    16,601           14,707
 Deferred income taxes                           5,743           12,744
 Gas stored underground                         11,115             -
 Other                                           1,908            2,636
   Total current assets                        126,135          184,560

Advances to Affiliates                         125,000          125,000

Investments, at Cost                             1,329            5,853

Property, Plant and Equipment:
 Natural gas transmission plant, at cost       940,300          925,829
 Less -- Accumulated depreciation and
   amortization                                 55,843           26,643
   Property, plant and equipment, net          884,457          899,186

Other Assets:
 Gas stored underground                        107,081          103,421
 Costs recoverable from customers               62,142           73,879
 Other                                          10,356            6,218
   Total other assets                          179,579          183,518

   Total Assets                             $1,316,500       $1,398,117
</TABLE>                                
 The accompanying condensed notes are an integral part of these
                      financial statements.
<PAGE>
               TEXAS GAS TRANSMISSION CORPORATION
                                
                         BALANCE SHEETS
                     (Thousands of Dollars)
                           (Unaudited)

<TABLE>
<CAPTION>
                                            September 30,    December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY           1996             1995
<S>                                        <C>              <C>
Current Liabilities:
 Payables:
   Trade                                    $    3,466       $    6,857
   Affiliates                                   22,845           20,566
   Other                                         7,250           20,733
 Transportation and exchange gas payable         5,108            8,031
 Accrued liabilities                            63,819           52,250
 Accrued gas supply realignment costs            5,589           16,717
 Costs refundable to customers                   4,315            4,618
 Reserve for regulatory and rate matters          -              25,576
   Total current liabilities                   112,392          155,348

Long-Term Debt                                 254,101          255,860

Other Liabilities and Deferred Credits:
 Income taxes refundable to customers            3,839            4,979
 Deferred income taxes                         140,112          138,308
 Postretirement benefits other than pensions    45,405           54,400
 Other                                          53,350           43,984
   Total other liabilities and deferred
     credits                                   242,706          241,671

Contingent Liabilities and Commitments

Stockholder's Equity:
 Common stock, $1.00 par value, 1,000 shares
   authorized, issued and outstanding                1                1
 Premium on capital stock and other paid-in
   capital                                     707,146          740,446
 Retained earnings                                 154            4,791
   Total stockholder's equity                  707,301          745,238

   Total Liabilities and Stockholder's
     Equity                                 $1,316,500       $1,398,117

</TABLE>

 The accompanying condensed notes are an integral part of these
                      financial statements.
<PAGE>
               TEXAS GAS TRANSMISSION CORPORATION
                                
                      STATEMENTS OF INCOME
                     (Thousands of Dollars)
                           (Unaudited)

<TABLE>
<CAPTION>
                                         For the Three       For theThree
                                         Months Ended        Months Ended
                                      September 30, 1996  September 30, 1995
<S>                                     <C>                 <C>
Operating Revenues:
 Gas sales                               $  9,929            $ 10,445
 Gas transportation                        53,944              54,692
 Other                                        510                 589
   Total operating revenues                64,383              65,726

Operating Costs and Expenses:
 Cost of gas sold                           9,483              10,403
 Cost of gas transportation                 7,280               9,050
 Operation and maintenance                 17,487              15,476
 Administrative and general                14,164              13,312
 Depreciation and amortization             10,359              11,151
 Taxes other than income taxes              3,717               3,445
   Total operating costs and expenses      62,490              62,837

Operating Income                            1,893               2,889

Other (Income) Deductions:
 Interest expense                           5,198               5,857
 Interest income                           (3,005)             (3,382)
 Miscellaneous other deductions                19                 109
   Total other deductions                   2,212               2,584

Income (Loss) Before Income Taxes            (319)                305

Provision for Income Taxes                     43                 816

Net Income (Loss)                        $   (362)           $   (511)
</TABLE>
                                
 The accompanying condensed notes are an integral part of these
                      financial statements.
<PAGE>
The  acquisition  of the Company by The Williams Companies,  Inc.
was   accounted  for  using the purchase  method  of  accounting.
Accordingly, the purchase price was "pushed down" and recorded in
the   accompanying   financial  statements  which   affects   the
comparability of the post-acquisition and pre-acquisition results
of operations and cash flows.

                                
               TEXAS GAS TRANSMISSION CORPORATION
                                
                      STATEMENTS OF INCOME
                     (Thousands of Dollars)
                           (Unaudited)
<TABLE>
<CAPTION>
                                   Post-Acquisition           Pre-Acquisition
                                                               For the Period
                             For the Nine    For the Period      January 1,
                             Months Ended   January 18, 1995      1995 to
                             September 30,  to September 30,     January 17,
                                1996            1995               1995
<S>                           <C>            <C>                <C>
Operating Revenues:
 Gas sales                     $ 44,553       $ 36,788           $  3,239
 Gas transportation             216,396        181,416             15,932
 Other                            1,528          1,866                130
   Total operating revenues     262,477        220,070             19,301

Operating Costs and Expenses:
 Cost of gas sold                43,976         36,570              3,188
 Cost of gas transportation      30,670         27,574              2,134
 Operation and maintenance       46,706         40,536              2,433
 Administrative and general      45,507         40,767              3,086
 Provision for severance
   benefits                        -              -                 6,772
 Depreciation and amortization   31,435         30,392              1,779
 Taxes other than income taxes   11,372         10,014                721
   Total operating costs
     and expenses               209,666        185,853             20,113

Operating Income (Loss)          52,811         34,217               (812)

Other (Income) Deductions:
 Interest expense                15,796         16,194              1,122
 Interest income                 (9,939)        (8,956)              (560)
 Miscellaneous other (income)
   deductions                       611             34                 56
   Total other deductions         6,468          7,272                618

Income (Loss) Before Income
  Taxes                          46,343         26,945             (1,430)

Provision for Income Taxes       18,428         12,409              1,884

Net Income (Loss)              $ 27,915       $ 14,536           $ (3,314)
</TABLE>
                                
 The accompanying condensed notes are an integral part of these
                      financial statements.
<PAGE>
The  acquisition  of the Company by The Williams Companies,  Inc.
was  accounted  for  using  the purchase  method  of  accounting.
Accordingly, the purchase price was "pushed down" and recorded in
the   accompanying   financial  statements  which   affects   the
comparability of the post-acquisition and pre-acquisition results
of operations and cash flows.

               TEXAS GAS TRANSMISSION CORPORATION
                    STATEMENTS OF CASH FLOWS
                      (Thousands of Dollars)
                           (Unaudited)
                                
<TABLE>
<CAPTION>
                                   Post-Acquisition           Pre-Acquisition
                                                               For the Period
                             For the Nine    For the Period      January 1,
                             Months Ended   January 18, 1995      1995 to
                             September 30,  to September 30,     January 17,
                                1996            1995               1995
<S>                           <C>            <C>                <C>
OPERATING ACTIVITIES:
 Net income (loss)             $ 27,915       $ 14,536           $ (3,314)
 Adjustments to reconcile to
  cash provided from
  operations:
   Depreciation and depletion    31,435         30,392              1,779
   Provision for deferred
     income taxes                 8,805        (12,867)              (695)
   Changes in receivables sold  (11,900)        (8,100)           (14,806)
   Changes in receivables        18,356         31,834              2,113
   Changes in inventories        (1,894)           648                118
   Changes in other current
     assets                      11,253         34,625              2,048
   Changes in accounts payable  (16,868)        (4,708)            (3,607)
   Changes in accrued
     liabilities                (38,007)         7,166              4,913
   Other, including changes
     in noncurrent assets
     and liabilities             11,897         12,649              5,490
      Net cash provided (used)
        by operating activities  40,992        106,175             (5,961)

FINANCING ACTIVITIES:
 Dividends and returns of
   capital                      (61,394)       (15,000)              -
 Other -- net                      -               112                 59
   Net cash (used) provided by
     financing activities       (61,394)       (14,888)                59

INVESTING ACTIVITIES:
 Property, plant and equipment:
   Capital expenditures,
     net of AFUDC               (29,004)       (25,583)            (1,898)
   Proceeds from sales and
     salvage values, net of
     costs of removal              (691)         1,725                (21)
 Advances to affiliates, net     50,352        (68,020)             7,852
   Net cash provided (used) by
     investing activities        20,657        (91,878)             5,933

Increase (Decrease) in Cash
  and Cash Equivalents              255           (591)                31
Cash and Cash Equivalents
  at Beginning of Period            206            943                912
Cash and Cash Equivalents
  at End of Period             $    461       $    352           $    943

Supplemental Disclosure of
 Cash Flow Information:
   Cash paid during the
    period for:
   Interest (net of amount
     capitalized)              $  17,093      $ 11,639           $  4,856
   Income taxes (refunds), net     9,210         21,865            (7,395)
</TABLE>                                
 The accompanying condensed notes are an integral part of these
                      financial statements.
<PAGE>
               TEXAS GAS TRANSMISSION CORPORATION
             CONDENSED NOTES TO FINANCIAL STATEMENTS
                           (Unaudited)
                                

A.  Corporate Structure and Control, Nature of Operations and
    Basis of Presentation

    Corporate Structure and Control

   Effective May 1, 1995, Texas Gas Transmission Corporation (the
Company)  became  a  wholly  owned  subsidiary  of  The  Williams
Companies,  Inc. (Williams).  Prior to May 1, 1995,  the  Company
was a wholly owned subsidiary of Transco Gas Company, which was a
wholly owned subsidiary of Transco Energy Company (Transco).   As
used  herein, the term Williams refers to The Williams Companies,
Inc.  together  with  its wholly owned subsidiaries,  unless  the
context otherwise requires.

   Seasonal Variation

    Operating income may vary by quarter.  Because of its current
rate structure, the Company experiences lower operating income in
the second and third quarters as compared to the first and fourth
quarters.

   Basis of Presentation

   The financial statements have been prepared from the books and
records  of the Company without audit, pursuant to the rules  and
regulations  of the Securities and Exchange Commission.   Certain
information   and  footnote  disclosures  normally  included   in
financial   statements  prepared  in  accordance  with  generally
accepted  accounting principles have been condensed  or  omitted.
As  a  result of the change in control of the Company to Williams
on  January  18, 1995, the Statement of Income and  Statement  of
Cash Flows for the nine months ended September 30, 1995 have been
segregated into a pre-acquisition period ending January 17,  1995
and  a  post-acquisition period beginning January 18, 1995.   The
accompanying   unaudited   financial   statements   include   all
adjustments,  both  normal recurring and others,  which,  in  the
opinion  of  the Company's management, are necessary  to  present
fairly its financial position at September 30, 1996, and December
31,  1995;  results  of operations and cash flows  for  the  nine
months  ended September 30, 1996, the period January 18, 1995  to
September 30, 1995, and the period January 1, 1995 to January 17,
1995;  and  results  of  operations for the  three  months  ended
September  30, 1996 and 1995.  These financial statements  should
be  read  in  conjunction  with the financial  statements,  notes
thereto  and  management's narrative analysis  contained  in  the
Company's 1995 Annual Report on Form 10-K and the Company's  1996
First and Second Quarter Reports on Form 10-Q.

    The acquisition by Williams has been accounted for using  the
purchase method of accounting.  Accordingly, an allocation of the
purchase price was assigned to the assets and liabilities of  the
Company,  based on their estimated fair values. The  accompanying
financial  statements reflect the pushdown of the purchase  price
allocation  (amounts  in excess of book value)  to  the  Company.
Included  in property, plant and equipment at September 30,  1996
is  an aggregate of $430 million related to amounts in excess  of
<PAGE>
the  original cost of the regulated facilities as a result of the
Williams' and prior acquisitions.  This amount is being amortized
over  the estimated useful lives of these assets at approximately
$11   million  per  year.   Current  Federal  Energy   Regulatory
Commission  (FERC) policy does not permit the Company to  recover
through its rates amounts in excess of original cost.

   Certain reclassifications have been made in the 1995 financial
statements to conform to the 1996 presentation.

B.  Contingent Liabilities and Commitments

   Regulatory and Rate Matters and Related Litigation

   FERC Order 636

    Effective  November  1,  1993, the Company  restructured  its
business  to  implement the provisions of FERC Order 636,  which,
among other things, required pipelines to unbundle their merchant
role  from  their transportation services. FERC  Order  636  also
provides  that  pipelines should be allowed  the  opportunity  to
recover  all prudently incurred transition costs which,  for  the
Company,  are  primarily related to Gas Supply Realignment  (GSR)
costs and unrecovered purchased gas costs. Certain aspects of the
Company's FERC Order 636 restructuring are under appeal.

    On  July 16, 1996, the United States Court of Appeals for the
District  of Columbia (D.C. Circuit Court) issued an order  which
in  part  affirmed and in part remanded FERC Order 636.  However,
the court stated that FERC Order 636 would remain in effect until
the  FERC  issued  a final order on remand after considering  the
remanded issues.  With the issuance of this decision, the stay on
the appeals of individual pipeline's restructuring cases has been
lifted.   Although  no  assurances can be given  as  regards  the
appeals of the Company's restructuring case, the effect of  those
appeals  should  be  limited since FERC  Order  636  was  largely
upheld.

    In  September 1995, the Company received FERC approval  of  a
settlement  agreement  which resolves all  issues  regarding  the
Company's  recovery of GSR costs.  The settlement  provides  that
the Company will recover 100% of its GSR costs up to $50 million,
will  share in costs incurred between $50 million and $80 million
and  will  absorb  any GSR costs above $80  million.   Under  the
settlement,  all  challenges to these costs, on  the  grounds  of
imprudence  or  otherwise,  will  be  withdrawn  and  no   future
challenges  will be filed.  Ninety percent of the  cost  recovery
will  be  collected via demand surcharges on the  Company's  firm
transportation rates; the remaining 10% should be recovered  from
its interruptible transportation service.

    The aforementioned July 16, 1996, D.C. Circuit Court decision
concerning FERC Order 636 has remanded to the FERC the issues  of
whether  pipelines  should absorb a portion  of  FERC  Order  636
transition  costs  and  whether  10%  of  such  costs  should  be
allocated to interruptible transportation services; however,  the
Company  should be unaffected by such remand due to the Company's
GSR settlement, discussed below, which is not subject to appeal.
<PAGE>
    Through September 30, 1996, the Company has paid, or  expects
to pay, approximately $80.0 million for GSR costs, primarily as a
result  of  contract  terminations.  The  Company  has  recovered
approximately $54.5 million, plus interest, in GSR costs and  has
recorded  a  regulatory asset of approximately $12.7 million  for
the  estimated  future recovery of its GSR costs, most  of  which
will be collected from customers prior to December 31, 1997.

   The settlement also extends the Company's pricing differential
recovery mechanism for GSR contracts in litigation as of November
1,  1996.  This mechanism allows the Company to recover purchased
gas  costs incurred under these remaining GSR contracts in excess
of amounts recovered through the sale of such gas at auction.

     Additionally,   the  Company's  transition  costs   included
unrecovered purchased gas costs for periods prior to November  1,
1993,  pursuant to FERC Order 636.  In October 1995, the  Company
received FERC approval of a settlement with its customers,  under
which  requirements the Company ultimately absorbed approximately
$0.7  million of these costs, which was recognized as expense  in
1995.  Refunds of overrecovered amounts totaling $4 million  were
issued in December 1995 and January 1996.

   General Rate Issues

    On  September 30, 1994, the Company filed a general rate case
(Docket  No.  RP94-423)  which became effective  April  1,  1995,
subject to refund.  A proposed settlement was filed with the FERC
on  September 29, 1995, and approved by the FERC on February  20,
1996.  Refunds of approximately $23.2 million including interest,
for  which  the  Company had provided a reserve,  were   made  to
customers in April 1996.

    During  1995  and 1996, the Company made filings  to  reflect
changes  in  costs of transportation by others, pursuant  to  the
Transportation Cost Adjustment tracker provisions of its approved
tariff.   Pursuant  to  that tariff, in  May  1995,  the  Company
refunded $13.3 million of overcollected transportation costs.

   Royalty Claims and Producer Litigation

    In  connection  with the Company's renegotiations  of  supply
contracts  with  producers  to  resolve  take-or-pay  and   other
contract claims, the Company has entered into certain settlements
which  may require the indemnification by the Company of  certain
claims for royalties which a producer may be required to pay as a
result  of such settlements.  The Company has been made aware  of
demands  on  producers for additional royalties and  may  receive
other  demands which could result in claims against  the  Company
pursuant  to  the  indemnification provision in its  settlements.
Indemnification for royalties will depend on, among other things,
the specific lease provisions between the producer and the lessor
and  the  terms  of the settlement between the producer  and  the
Company.  The Company may file to recover 75% of any such amounts
it  may  be  required  to  pay pursuant to  indemnifications  for
royalties  under the provisions of FERC Order 528.   The  Company
has  provided reserves for the estimated settlement costs of  its
royalty claims and litigation.
<PAGE>
    On  March 3, 1995, Ergon, Inc. and Ergon Exploration  (Ergon)
filed  a lawsuit against the Company in the U.S. District  Court,
West District Louisiana, seeking approximately $45,000 in damages
for  gas  purchased in calendar year 1994, a declaratory judgment
concerning the proper construction of the pricing provisions of a
gas   purchase   contract,  unspecified   future   damages   and,
alternatively,  a reformation of or rescission  of  an  agreement
amending  the  gas purchase contract.  The Company  is  currently
recovering  costs incurred under subject contract  as  GSR  costs
pursuant to FERC Order 636 and anticipates continued recovery  of
future  amounts  consistent  with the  GSR  settlement  discussed
above.

   Other Litigation

    On July 18, 1996, an individual filed a lawsuit in the United
States  District  Court for the District of Columbia  against  70
natural  gas  pipelines and other gas purchasers  or  former  gas
purchasers.   All of Williams' natural gas pipeline subsidiaries,
including  the Company, are named as defendants in  the  lawsuit.
The  plaintiff claims, on behalf of the United States  under  the
False  Claims  Act, that the pipelines have incorrectly  measured
the  heating  value or volume of gas purchased by the defendants.
The  plaintiff  claims that the United States  has  lost  royalty
payments  as a result of these practices.  The Williams'  natural
gas   pipeline  subsidiaries,  as  well  as  other  natural   gas
pipelines, intend to vigorously defend against these claims.

   Environmental Matters

    Since  1989,  the  Company has had studies underway  to  test
certain of its facilities for the presence of toxic and hazardous
substances  to determine to what extent, if any, remediation  may
be  necessary.  On the basis of the findings to date, the Company
estimates  that  environmental assessment and  remediation  costs
that  may be incurred over the next two to three years will total
approximately  $4  million to $10 million.  As of  September  30,
1996,  the Company has a reserve of approximately $5 million  for
these  estimated costs.  This estimate depends upon a  number  of
assumptions  concerning  the scope of remediation  that  will  be
required  at certain locations and the cost of remedial  measures
to   be   undertaken.   The  Company  is  continuing  to  conduct
environmental  assessments  and  is  implementing  a  variety  of
remedial  measures that may result in increases or  decreases  in
the total estimated costs.

    The  Company used lubricating oils containing polychlorinated
biphenyls  (PCBs)  and,     although the use  of  such  oils  was
discontinued   in  the  1970's,  has  discovered   residual   PCB
contamination  in equipment and soils at certain  gas  compressor
station sites.  The Company continues to work closely with the U.
S.  Environmental  Protection Agency (EPA) and  state  regulatory
authorities regarding PCB issues and has programs to  assess  and
remediate  such conditions where they exist, the costs  of  which
are  a significant portion of the $4 million to $10 million range
discussed above.

    The  Company  currently  is either  named  as  a  potentially
responsible   party  or  has  received  an  information   request
regarding  its  potential involvement at  certain  Superfund  and
state  waste disposal sites.  The anticipated remediation  costs,
if  any, associated with these sites have been included in the $4
million to $10 million range discussed above.
<PAGE>
   The Company considers environmental assessment and remediation
costs  and  costs  associated with compliance with  environmental
standards  to be recoverable through rates, as they  are  prudent
costs  incurred in the ordinary course of business.   The  actual
costs  incurred will depend on the actual amount  and  extent  of
contamination discovered, the final cleanup standards mandated by
the EPA or other governmental authorities, and other factors.  To
date,  the  Company has been permitted recovery of  environmental
costs  incurred,  and  it  is the Company's  intent  to  continue
seeking  recovery  of  such  costs,  as  incurred,  through  rate
filings.   Therefore, the estimated recoveries  of  environmental
assessment and remediation costs have been recorded as regulatory
assets in the accompanying balance sheets.

   Summary of Contingent Liabilities and Commitments

   While no assurances may be given, the Company does not believe
that the ultimate resolution of the foregoing matters, taken as a
whole  and  after  consideration of  amounts  accrued,  insurance
coverage,   recovery  from  customers  or  other  indemnification
arrangements,  will  have a materially adverse  effect  upon  the
Company's  future financial position, results of  operations  and
cash flow requirements.

C.  Adoption of Accounting Standard

    Effective  January 1, 1996, the Company adopted Statement  of
Financial   Accounting   Standards  No.  121,   "Accounting   for
Impairment of Long-Lived Assets and for Long-Lived Assets  to  be
Disposed  Of."   Adoption of the standard had no  effect  on  the
Company's financial position or results of operations.


<PAGE>
Item  2.  Management's  Narrative Analysis  of  the  Results  of
          Operations
          (Filed Pursuant to General Instruction H)

                          Introduction

    As  discussed in Note A, the Company was acquired by Williams
through a merger of a Williams' subsidiary and Transco, effective
May  1,  1995.   Williams  became a  majority  owner  of  Transco
effective  January  18, 1995, at which date the  effects  of  the
acquisition  were  pushed  down and recorded  on  the  books  and
records  of the Company.  The pushdown of the acquisition affects
the  comparability  of  the Company's pre-  and  post-acquisition
results of operations.  The following analysis represents  a  pro
forma comparison of the full first nine months of the current and
prior  years, with disclosure of material variances  due  to  the
acquisition.


                Financial Analysis of Operations
        Nine Months Ended September 30, 1996 Compared to
              Nine Months Ended September 30, 1995


    Operating  income was $19 million higher for the nine  months
ended  September  30,  1996,  than  for  the  nine  months  ended
September  30,  1995.   The  increase  in  operating  income  was
primarily attributable to higher transportation revenues  due  to
new  rates that became effective on April 1, 1995, and  a  recent
rate  case  settlement  which resulted in a  first  quarter  1996
adjustment  to  regulatory accruals.  The  revenue  increase  was
partially offset by higher operating and maintenance expenses and
the  first  quarter  1995 provision for severance  benefits  that
resulted from the acquisition by Williams. Compared  to 1995, net
income  was $17 million higher due to the same reasons  discussed
above  and  lower  interest expense.  The lack  of  tax  benefits
associated with the provision for severance benefits incurred  in
1995  resulted  in a higher effective tax rate in  1995  than  in
1996.   Because  of  its  rate structure, the  Company  typically
experiences  lower  operating income  in  the  second  and  third
quarters as compared to the first and fourth quarters.

     Operating   revenues   increased   $23   million   primarily
attributable to higher transportation revenues due to  new  rates
that  became  effective  on April 1, 1995,  a  recent  rate  case
settlement  which resulted in a first quarter 1996 adjustment  to
regulatory accruals and higher gas sales due to higher gas prices
in  1996  than  in 1995.  System deliveries were 578.2  TBtu  and
498.4  TBtu  for the nine months of 1996 and 1995,  respectively,
which,   to  a  lesser  extent,  also  contributed  to  increased
revenues.   As  discussed  in  Note B,  "Summary  of  Significant
Accounting Policies," of the Company's 1995 Annual Report on Form
10-K,  the  Company's gas sales have no impact on its results  of
operations.

   Operating expenses increased $4 million primarily attributable
to  higher  cost of gas sold due to higher gas prices and  higher
costs related to pipeline maintenance projects.  Higher operating
expenses  were  partially  offset  by  the  first  quarter   1995
provision   for  severance  benefits  that  resulted   from   the
acquisition by Williams.
<PAGE>

    Competition for natural gas transportation has intensified in
recent  years  due  to customer access to other  pipelines,  rate
competitiveness  among pipelines and customers'  desire  to  have
more  than one supplier.  The FERC's stated purpose for its Order
636  was to improve the competitive structure of the natural  gas
pipeline  industry.  Future utilization of the Company's pipeline
capacity  will  depend on competition from  other  pipelines  and
alternative  fuels, the general level of natural gas  demand  and
weather conditions.  Several of the ultimate consumers within the
Company's markets have the ability to switch to alternate  fuels;
to  date,  however, losses due to fuel switching  have  not  been
significant.  The Company estimates its maximum potential loss to
fuel switching is less than one quarter of total deliveries.

    When  restructured tariffs became effective under FERC  Order
636,  all suppliers of natural gas were able to compete  for  any
gas  markets  capable  of  being served by  the  pipelines  using
nondiscriminatory  transportation  services   provided   by   the
pipelines.   As  the  FERC  Order 636 regulated  environment  has
matured,  many pipelines have faced reduced levels of  subscribed
capacity  as  contractual  terms expire  and  customers  opt  for
alternative  sources of transmission and related services.   This
issue  is  known  as  "capacity turnback" in the  industry.   The
Company is working diligently to replace any and all markets lost
due  to  capacity  turnback, as well as to  pursue  new  markets.
During  1996, the Company increased firm service to  one  of  its
largest customers and extended the service agreement through  the
third  quarter of the year 2000.  All capacity turned  back  this
year  has been fully subscribed, and the Company anticipates that
it will continue to be able to remarket future capacity turnback.

                                
                Financial Condition and Liquidity

   On May 1, 1995, Transco paid  as a dividend to Williams all of
Transco's interests in the Company.  Williams intends to maintain
and  expand  the  existing core business of the  Company  and  to
promptly pursue new business opportunities made available to  the
Company.   Through  the  years,  the  Company  has   consistently
maintained   its   financial  strength  and  experienced   strong
operational  results.   The  Company's  acquisition  by  Williams
further enhances its financial and operational strength, as  well
as  allows the Company to take advantage of new opportunities for
growth.   If  necessary, the Company also expects to be  able  to
access  public and private capital markets to finance its capital
requirements.

    The Company is a participant with other Williams subsidiaries
in  an $800 million credit agreement under which the Company  may
borrow  up  to  $200  million, subject  to  borrowings  by  other
affiliated  companies.  Interest rates vary with  current  market
conditions.  As of September 30, 1996, the Company had no amounts
outstanding under this facility.

    For  financial statement reporting purposes, a  $100  million
current  debt obligation has been classified as noncurrent  based
on  the  Company's intent and ability to refinance on a long-term
basis.   The  amount  available under  the  $800  million  credit
agreement is sufficient to complete this refinancing.

    Effective  May  1, 1995, the Company began  participation  in
Williams' cash management program.  On that date, the balance  of
the  advances  due from Transco were transferred  by  Transco  to
<PAGE>
Williams.  These advances are represented by demand notes payable
to  the  Company.  Those  amounts that  the  Company  anticipates
Williams  will repay in the next twelve months are classified  as
current assets, while the remainder are classified as noncurrent.
The  interest  rate on intercompany demand notes  is  the  London
Interbank Offered Rate on the first day of the month plus 0.45%.

   In May 1995, the Company entered into a program with a bank to
sell  up  to  $35  million  of  trade  receivables  with  limited
recourse.   On September 30, 1996, and on December 31, 1995,  $15
million  and $27 million, respectively, of such receivables  were
sold.

    The  Company's capital expenditures for the first nine months
of  1996 and 1995 were $29 million and $27 million, respectively.
Capital  expenditures for 1996 are expected  to  approximate  $55
million.    The   Company's  debt  as  a  percentage   of   total
capitalization at September 30, 1996 and December  31,  1995  was
26.4% and 25.6%, respectively.

    In  September  1994, the Company filed a  general  rate  case
(Docket  No. RP94-423) which was effective April 1, 1995, subject
to  refund.   A proposed settlement was filed with  the  FERC  on
September 29, 1995, and was approved by the FERC on February  20,
1996.  Refunds of approximately $23.2 million including interest,
for  which  the  Company  had provided a reserve,  were  made  to
customers in April 1996.

<PAGE>


                   PART II - OTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K

        (a) Exhibits
               
            None

        (b) Reports on Form 8-K

            None




<PAGE>






                       S I G N A T U R E S


Pursuant  to the requirements of the Securities Exchange  Act  of
1934, the registrant has duly caused this report to be signed  on
its behalf by the undersigned thereunto duly authorized.

                                  TEXAS GAS TRANSMISSION CORPORATION



DATE:  November 7, 1996           BY: /s/ G. D. Lauderdale
                                      ---------------------------
                                          G. D. Lauderdale
                                        Senior Vice President
                                         and General Manager


DATE:  November 7, 1996           BY: /s/ E. J. Ralph
                                      ---------------------------
                                          E. J. Ralph
                                      Vice President, Treasurer,
                                      Controller, and Assistant
                                      Secretary